Brazil's government expects to raise BRL22.4 billion ($4.4 billion) from an extraordinary pre-salt oil auction in 2027, according to an annex to the budget bill submitted to congress, a revenue source that will be crucial to achieving its goal of posting its first effective primary surplus in years.
The leftist government of President Luiz Inacio Lula da Silva, who will seek re-election in October, projected a BRL18.6 billion primary surplus next year, equivalent to 0.13 per cent of gross domestic product. If achieved, it would mark Brazil's first primary surplus since 2022.
Government officials argue, however, that the 2022 result was distorted by the postponement of part of the government's court-ordered debt payments, after then-President Jair Bolsonaro's administration approved a constitutional amendment capping those expenditures - which Lula later reversed.
Finance Minister Dario Durigan has said Lula will leave the next administration, regardless of who wins the election, with a balanced budget that does not depend on additional measures requiring Congress' approval.
In practice, however, the auction of oil from pre-salt, an offshore area in Brazil, will be pivotal to meeting the fiscal target, as the expected proceeds exceed the projected primary surplus itself.
A government official, speaking on condition of anonymity, confirmed expectations that the proceeds would be collected.
The planned operation would involve the sale of future revenue streams tied to the federal government's share of oil output, a second source familiar with the matter said.
Earlier this year, the government had expected to raise BRL31 billion from a new extraordinary pre-salt auction, but the estimate was scrapped in May.
At the time, the government said the model for selling federal government rights in the pre-salt region had been questioned by Brazil's federal audit court TCU, making it necessary to remove the projected revenue "until the oil disposal model has been properly implemented."
(Reporting by Marcela Ayres and Bernardo Caram in Brasilia; Editing by Alistair Bell)